Use fees - ACTRA National (2024)

Use fees

The two most common options for payingfor Use are Prepayment and the Advance.

If a producer has not paid a Prepaymentor Advance at the time of production and then uses the Production in othermedia, they owe Residuals.

At the time of production, Producerschoose a “Declared Use” which is indicated on the contract. In exchange forpayment of the daily fee, producers can use the production in the Declared Usewithout additional payment.

Look to the IPA for media, term andterritory included in each Declared Use (e.g. Theatrical includes worldwide usein theatres for the life of copyright of a Production; Free TV includes one runon free tv in Canada only; Pay TV includes one year on pay tv in Canada only).

If the Producer wants to use the production outside the Declared Use, meaning in another media, territory, or for a longer period of time than the Declared Use allows, they are obligated to pay Additional Use fees. Producers choose the Additional Use fees at the bottom of the contract. All performers on a production must receive the same method of

Use fees, e.g. all receive a 105% Prepayment, or a 50% Advance. Producers can’t mix the different Prepayments or Advances on a production.

If the Producer hasn’t selected the Prepayment or Advance at the time of production, and then uses the production outside the Declared Use (for example the Declared Use was Free TV which allows for one run in Canada, and they continue to use it in Fee TV, or Pay TV, or Cable they owe Residual payments. As set out in B403, a percentage of performers’ Net Fees are owed for each individual Use (for example, 30% of Net Fees for one domestic run in Canada + 25% of Net Fees for 12 months’ Use on Pay TV in Canada + 30% for 12 months’ Use in the U.S., etc..). As residuals are paid “a la carte”, they can add up quickly and are not generally used.

Both the Prepayment and the Advance area % of Net Fees paid to performers at the time of production for Use, but theyare structured differently. Producers have different ongoing obligations toACTRA and to performers under each.

The Prepayment is a payment made at thetime of production for use of the production for a fixed period of time (forexample if the Declared Use is Free TV, a 110% “Prepayment” of Net Fees allowsuse in all media including new media but excluding theatrical, worldwide, for a4 year term).

The clock on the prepayment term startsat the first residual use of the Production, meaning the first use outside theDeclared Use. For example, you might have been in a movie produced in 2006,released Theatrically in 2007 and then went to Pay TV, but not until Jan 1,2008. The 4‐year term starts Jan 1 2008, on that first use.

Following the expiry of the term,Performers receive a percentage of Distributor’s Gross Revenue (DGR) foradditional sales. These are sales or Use of the production that happen followingthe expiry, it usually takes 6 months to a year, for these additional sales to happen,for Producer to receive the money and send the funds to ACTRA PRS. Simple, clean,easy structure.

When a Producer chooses an Advancepayment, they are choosing to compensate Performers for Use with a share inrevenue. To mitigate our risk of a rev share model, they need to pay some of itupfront, at the time of Production. In other words, they need to “Advance”performers money that they may not have earned yet in backend revenue.

The amount of Advance paid to each Performer is calculated using the percentage that corresponds to the share of DGR that Performers will receive (as noted on this slide and in B501(c) of the IPA). The lower the share in revenue, the higher the Advance paid at the time of production. The percentage of Advance is the same for all performers on the Production.

“Net Fees” is defined in the IPA as feesearned on days in front of camera or behind the microphone, and specificallyexcludes prop shots, meal penalties, travel time, late payment penalties, etc.See the A427 of the IPA for the complete definition.

Before producer pay additional amountsto performers, they can recoup the “Aggregate Advance”. We add up the amount ofAdvance paid to all performers on a Production to calculate the “AggregateAdvance”. The Aggregate Advance is the amount Producers recoup before payingadditional Use fees to Performers. They recoup at the percentage rate of DGRthat the performers are sharing in. For example, on a production with a 50%Advance and 5.6% share in DGR for performers, the producer recoups theAggregate Advance from 5.6% of all revenue received. Once the producer recoups,Performers start to receive additional payments for Use, sharing in DGR at thesame percentage on an ongoing basis.

Unlike the Prepayment which pays for Useup front for a defined period of time, with the Advance performers share inadditional revenue after the Aggregate Advance is recouped by the Producer –which could be 6 months, several years, or sometimes not at all because therearen’t enough sales outside the Declared Use.

For example, if the Declared Use wasTheatrical, the total Net Fees to performers on a Production was $225k and theProducer chooses a 75% Advance, they pay an additional $168k in Advances ($225kx 75% = $168k) to performers at the time of a production. This entitlesPerformers to share in 4.6% of DGR for sales outside of Theatrical. In thisexample,

the Producer needs to make $3.6M insales in media outside Theatrical (e.g. Pay TV, Download to Rent, Cable TV, orFree TV) before they recoup the Advance and performers start sharing in ongoingDGR.

Remember,there is no defined term to Use of the production with the Advance.

In calculating the share of DGR for Usepayments or for the recoupment of the Advance, sales made in the Declared Useare not relevant. For example, if the Declared Use is Theatrical, then revenuefrom Theatrical is not applied to recoupment of the Advance, and performersdon’t share in Theatrical revenue following recoupment of the Advance (or the

expiry of the Prepayment), because the producer received the right to exploit the production worldwide in Theatrical in exchange for the minimum daily fees. This Producer needs to make $3.6M in sales in media outside Theatrical (e.g. Pay TV, Download to Rent, Cable TV, or Free TV) before they recoup the Advance and performers start sharing in ongoing DGR.

When is paymenttriggered to performers?

For the Advance: once the producer hasrecouped the Aggregate Advance from a percentage of DGR derived from sales theProduction outside the Declared Use.

For the Prepayment: payment toperformers is owed following the Prepayment, for any use outside the DeclaredUse.

The amount of revenue owed is sent toACTRA PRS, where we calculate how many units each performer has, and divide thepayment accordingly among the performers on a production.

Any questions?

Contact Us!

ACTRA PRS

prs@actra.ca

www.www.actra.ca/prs/about‐prs

416-489-1311or 1-800-387-3516